The potential of financial technology to foster sustainable social entrepreneurship in India and contribute to the attainment of the United Nations' sustainable development goals (SDGs) has become increasingly apparent with the technological advances of the past few decades revolutionizing the way we live, work, and communicate. India, despite its rapid economic growth, encounters notable obstacles in realising the SDGs, such as poverty, inequality, and environmental deterioration. Conventional financial institutions have not effectively addressed these concerns. This chapter analyses the influence of financial technology (FinTech) on financial inclusion, the emergence of digital payments, blockchain technology, and their potential to facilitate social entrepreneurship that can lead to favourable social and environmental outcomes. The chapter delineates the challenges and opportunities that the FinTech industry offers to social entrepreneurship in India.
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In recent times, there's been a marked rise in the Financial Technology (FinTech) sector's influence, acting as a pivotal force propelling sustainable social entrepreneurship. This is especially noticeable in India's scenario (Asif et al., 2023; Goswami et al., 2022; Masiero & Ravishankar, 2019). Despite being home to over 1.3 billion inhabitants and standing as one of the globe's rapidly expanding economic hubs, India grapples with pressing challenges in its journey toward achieving the UN's Sustainable Development Goals (SDGs). Beyond the evident issues of poverty and inequality, the nation wrestles with limited access to basic amenities, environmental deterioration, and the looming threat of climate change. Pioneering strategies from the FinTech domain are reshaping the modus operandi of social ventures, serving as a bridge connecting conventional financial bodies and marginalized sections of society (Salampasis & Mention, 2018).
Established financial entities have often come up short in addressing these prevailing challenges. Their typical focus on profitability often overshadows the larger purpose of societal impact, leading to the continued marginalization of vulnerable communities. However, the ground-breaking solutions pioneered by FinTech are ushering in a transformative era for social ventures, effectively narrowing the gap between these traditional financial powerhouses and the less privileged sections of society.
Anticipated developments in India's FinTech sector suggest a strong upward trend, with expected growth rates set at a Compound Annual Growth Rate (CAGR) of 22.7% spanning from 2020 to 2025, denoting a notable surge in momentum (Financial Services Sector in India | Fintech Industry in India, 2023). The national thrust towards digitization and encompassing financial inclusivity has played a pivotal role in fuelling this surge. Notably, since its rollout in 2014, the nation's cornerstone initiative, the Jan Dhan Yojana, with its ambitious aim to universalize banking access, has spearheaded the establishment of over 430 million bank accounts (Pradhan Mantri Jan-Dhan Yojana | Department of Financial Services | Ministry of Finance, n.d.). Several interlinked elements have driven the impressive growth of the FinTech industry (Maiti & Ghosh, 2023; León, 2021; Vaganova, 2021). These include the increasing prevalence of online financial exchanges, the broad reach of mobile internet users, and the innovative incorporation of blockchain methodologies. Capitalizing on these advancements, FinTech establishments have been adept at rolling out avant-garde financial solutions that are not only accessible and cost-effective but are also meticulously crafted to cater to the nuanced needs of previously underserved segments.
At its core, sustainable social entrepreneurship seeks to address environmental and societal challenges while simultaneously promoting economic progression. By melding entrepreneurial principles with a commitment to sustainable frameworks, this model offers innovative solutions to persistent issues such as poverty, stark inequalities, and the looming climate crisis. Integrating social and environmental objectives, sustainable social entrepreneurs not only contribute to community and environmental well-being but also play a crucial role in the broader societal fabric. They often target marginalized groups, providing essential products and services, generating jobs, and empowering through education and skills training. Moreover, by challenging traditional business paradigms and fostering stakeholder collaboration, they instigate systemic change. The eco-conscious practices adopted by these businesses, from renewable energy usage to sustainable sourcing, are instrumental in conserving natural resources and combating climate change repercussions.
Fintech presents a myriad of tools and platforms tailored for entrepreneurs driven by a sustainability ethos (Tripathy et al., 2022). Features like online payment solutions, mobile banking, and crowdfunding platforms empower these enterprises, allowing them to mobilize funds, optimize financial processes, and access a diverse pool of investors and philanthropists. Such technological leverage not only democratizes financial access but also strengthens the scalability and outreach of social enterprises. For instance, blockchain technology offers a transparent and robust mechanism for verifying and documenting impact metrics, enhancing both accountability and stakeholder trust (Spanò et al., 2022).